Taiwan loan house

IFR Asia Awards 2014
3 min read

Taiwanese banks faced a series of challenges in 2014 as foreign currency liquidity turned volatile and fears for China’s economy triggered a review of their exposure. CTBC Bank, however, outperformed its peers at home and did more than its rivals to bring international borrowers to Taiwan.

Exposure to China’s private sector was a particular focus for Taiwanese banks during the year, with defaults rising and Taiwanese authorities warning that loans were close to infringing regulatory limits.

CTBC relied on comprehensive due diligence to keep clear of Chinese loan defaults, while its landmark acquisition of Japan-based Tokyo Star Bank lifted its asset base and reduced the ratio of its China exposure to total net assets – a metric that regulators monitor – giving it greater flexibility to lend to mainland companies.

The lender showed its expertise in modelling structured transactions to arrange several notable private-equity deals, including a US$405.5m dual-tranche loan for Carlyle Group-owned Ta Chong Bank. CTBC showed its leadership and negotiating skills as a mandated lead arranger, bookrunner, underwriter and security agent on the deal. Despite a high loan-to-value ratio, the deal was oversubscribed due to a well-crafted deal structure and a targeted syndication strategy.

CTBC was the only common arranger and underwriter of two separate financings related to the buyout of cable TV operator China Network Systems from PE firm MBK Partners – a NT$52bn (US$1.67bn) facility for Taiwan’s Ting Hsin International Group and a seven-year loan of up to NT$48bn for Taiwan’s Far EasTone Telecommunications and Morgan Stanley Private Equity Asia. Both deals are pending approvals from Taiwan’s National Communications Commission.

The bank also brought top-tier Chinese borrowers to Taiwan, offering local lenders some welcome diversity and better returns. CTBC was one of two arrangers on a loan that recapitalised Carlyle’s investment in China’s Haier Electronics Group. Five Taiwan banks joined the HK$1.067bn (US$137.6m) loan, which was secured against convertible bonds.

CTBC was the only Taiwanese bank to lead a US$350m three-year onshore term loan for ICBC Financial Leasing, a wholly owned subsidiary of Industrial & Commercial Bank of China.

Compared with its peers, CTBC also took a leading role and made strong commitments in a handful of international deals for South-East Asian companies. CTBC was the sole Taiwanese bookrunner on the renminbi tranche of a US$1.73bn refinancing for commodity trading giant Trafigura, which was the first commodity loan to include a renminbi tranche in regional syndication. CTBC also arranged an increased US$475m five-year loan for Petron Corp, alongside five other international banks.

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